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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 10-SB12G/A2
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GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
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EAGLETECH COMMUNICATIONS, INC.
(Name of Small Business Issuer in its charter)
Nevada 13-4020694
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
305 South Andrews Avenue, Fort Lauderdale, Florida 33301
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(Address of principal executive offices) (Zip code)
Issuer's telephone number: (954) 462-1494
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock ($.0001 Par Value)
(Title of Class)
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TABLE OF CONTENTS
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PART I
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Item 1. Description of Business. 3
Item 2. Plan of Operation. 16
Item 3. Description of Property. 19
Item 4. Security Ownership of Certain Beneficial Owners and Management 19
Item 5. Directors, Executive Officers, Promoters and Control Persons 20
Item 6. Executive Compensation 22
Item 7. Certain Relationships and Related Transactions 23
Item 8. Description of Securities 24
PART II
Item 1. Market for Common Equities and Related Stockholder Matters 24
Item 2. Legal Proceedings 26
Item 3. Changes in and Disagreements with Accountants 26
Item 4. Recent Sales of Unregistered Securities. 27
Item 5. Indemnification of Directors and Officers. 29
PART F/S
Financial Statements 30
Table of Contents 31
PART III
Item 1. Index to Exhibits. 45
Signatures 46
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PART I
Item 1. Description of Business
Eagletech Communications, Inc. ("Eagletech" or the "Company") is a
development stage company in the business of providing telecommunications
services to its customers. Eagletech has not had revenues from operations in the
two years ending December 31, 1999. Eagletech expects to began generating
revenues from operations in April 2000. Eagletech has two service bureaus in use
and has begun to sign-up independent agents to sell its services. In April,
2000, Eagletech began advertising its services through local television in
Broward County, Florida. Eagletech expects operating losses and negative cash
flow to continue for the foreseeable future as it invests in equipment,
marketing and sales efforts and expansion of its services from its initial
limited geographic area. See, "Risk Factors," below. In addition, given
Eagletech's deficit and negative cash flow from operations, Eagletech's
auditors, in their report for the period ending March 31, 1999, have expressed
doubts as to whether Eagletech can remain viable as a "going concern." Eagletech
is dependent upon additional sales of its equity or debt securities to provide
the working capital necessary for Eagletech to remain in business. See, "Risk
Factors," below.
EXISTING PRODUCTS AND SERVICES
Eagletech has developed and is now providing proprietary communications
products and services for voice mail, messaging and connectivity. Eagletech's
patent-pending technology "unifies" a customer's voice mail and messaging
services with an additional service that allows a caller to be automatically
transferred to up to four telephone numbers to find the caller's intended party.
Eagletech provides a "unified" service by allowing voice mail, messaging and
connectivity services to be accessed by one telephone number. Eagletech's
technology makes it possible for mobile professionals (realtors, attorneys,
contractors and others who are often away from their offices) to maintain
real-time contact with callers using one telephone number while also providing
telephone access to voice mail and messages. A customer can use the Internet to
control various options of the system and for customer service questions. All of
these services are available now to users of Eagletech's real estate service
bureaus, described below. On May 1, 2000, Eagletech will open its enhanced
service bureau to individual customers in the Fort Lauderdale area. Unlike
competing systems, customers can use Eagletech's services with their existing
telephone equipment.
In a highly mobile world, business people need to be available to their
customers, even when out of the office. Eagletech's proprietary solution to this
telecommunications challenge is the "EagleOne" TM flat rate service that
includes:
o "One Number-Follow Me"- Allows a caller, by dialing
one number, to be transferred automatically to up to
four telephone numbers in search of the caller's
intended party. In this way, a caller is able to
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reach Eagletech's customer at his or her place of
business, cellular telephone, home or other
alternative numbers.
o "EagleAttendant" TM- Autoattendant greeting with a
custom recorded business greeting. When our customer
is not available, EagleAttendantTM answers his or her
telephone in a professional manner.
o "EagleAnnounce" TM - Screens calls, when the caller
announces his or her name, the user has the ability
to take important calls and send others to voice
mail.
o "EagleMail" TM - Voice mail service--callers have the
option to leave a detailed message of up to five
minutes in length. Voice mail messages are
automatically deleted after 30 days.
o "EagleMessage" TM - EagleMail TM messages are
delivered within minutes. Messages are re-delivered
until the intended party is found. The customer
specifies how often and how many times deliveries are
attempted.
o "EagleWeb" TM - Customers can set up and make changes
to transfer numbers, message delivery specifications
and the like using the Internet, or when on the road,
from a cellular telephone. Messages can be delivered
to a customer's email address and heard on a
multimedia computer.
o "EagleFax" TM - Store and forward your faxes to
any fax machine. EagleFax TM will notify you when
you have received a fax.
There are two distinct markets for Eagletech's products. The first is
integration of these services into a customer's existing private branch exchange
("PBX") system. A PBX is a customer-owned telecommunications exchange (an
in-house telephone system) that usually includes access to the public telephone
network. Unlike competing systems, Eagletech's services can be used with an
existing PBX--the customer does not need to scrap its existing telephone system.
Eagletech's first use of these services is in the real estate market, where it
is critical for a broker to be reached by a client. This customized solution
provides for not only "One Number-Follow Me" service but also other features
appropriate for this class of customers, such as fax on demand, allowing the
customer to remotely send a party information about a listed property. As of
April 1, 2000, the first two real estate systems in South Florida are
operational and are housed at the business premises of Eagletech's customers.
The second market consists of mobile professionals who are not part of
a larger organization that provides these types of critical communications
services. Eagletech has developed a service bureau to provide individuals with
the full range of its services in given geographic areas. Eagletech houses its
existing service bureau equipment in the same building as the local telephone
service provider's switching facilities for Broward County, Florida, which
determines the geographic area in which Eagletech now provides its services. In
the first calendar quarter of 2000, Eagletech installed its equipment for its
first service bureau in Broward County, Florida. On May 1, 2000, after extensive
testing,
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Eagletech will open this service bureau to customers. Eagletech is using Broward
County to prove its concept, test and refine its technology and begin developing
brand awareness through advertising.
PROPOSED EXPANSION
Eagletech intends to concentrate on expanding its service bureau
coverage geographically to include wider service areas, initially in the nine
state BellSouth service area and then throughout the United States. Eagletech's
expansion will be limited by equipment costs and any barriers to access to a
local telephone company's central office or switching facilities. In order for
Eagletech to provide services in a particular geographic area, Eagletech must
physically connect its equipment to the local telephone service provider's
central switching equipment. Each such central office serves a defined
geographic area.
In June, 2000, Eagletech intends to expand its service area to include
parts of Dade County, Florida. Eagletech will need substantial funds to complete
the regional and national roll-out of its services. See, "Plan of Operations."
Eagletech intends to use strategic relationships to market and sell its
products. Eagletech will manufacture and support the basic equipment necessary
for these services and provide the technical support associated with any
customized system and resolve questions raised by a service bureau customer. For
the service bureau market, Eagletech intends to build a national network of
service bureaus providing EagleOne TM services using local points of access,
similar to the way national Internet service providers offer Web access with
local access numbers.
Eagletech's Board of Directors has begun to implement this principal
business purpose described below under "Item 2 - Plan of Operation."
Eagletech was incorporated as Goldplate Holdings Enterprises, Inc. in
Nevada in August, 1997. In June 1999, Eagletech changed its name to Eagletech
Communications, Inc. Eagletech's corporate offices are located at 305 South
Andrews Avenue, Fort Lauderdale, Florida 33301. Eagletech's telephone number at
that location is (954) 462-1494.
Eagletech is filing this registration statement to enhance investor
protection and to provide information to the trading market. Eagletech believes
that investor protection is enhanced when its stockholders and other market
participants have easy access to current financial and other information about
Eagletech on a timely basis. By becoming a reporting company under the
Securities Exchange Act of 1934, as amended, (the "Exchange Act"), Eagletech
will be subject to quarterly and annual report filings, current report filings
for material events and proxy statement filings, all of which can be accessed by
market participants via the Securities and Exchange Commission website at
http://www.sec.gov.
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On December 11, 1997, the National Association of Securities Dealers,
Inc. (the "NASD") announced that its Board of Governors had approved a series of
proposed changes for the Over the Counter ("OTC") Bulletin Board and the OTC
market. The principal change, which was approved by the Securities and Exchange
Commission on January 4, 1999, allows only those companies that report their
current financial information to the Securities and Exchange Commission,
banking, or insurance regulators to be quoted on the OTC Bulletin Board. The
rule provides for a phase-in period for those securities already quoted on the
OTC Bulletin Board. Eagletech is filing this Registration Statement to comply
with that rule. Quotations for Eagletech's common stock (par value $0.0001 per
share) (the "Common Stock") are posted on the OTC Bulletin Board under the
symbol "EATCE."
Eagletech's business is subject to numerous risk factors, including,
but not limited to, the following:
RISKS RELATED TO EAGLETECH'S BUSINESS
DEVELOPMENT STAGE COMPANY; LIMITED OPERATING HISTORY. Eagletech is an
early-stage company and Eagletech expects to encounter risks and difficulties
frequently faced by early-stage companies in new and rapidly evolving markets.
Eagletech's predecessor was incorporated in 1996. Eagletech installed its first
system in September, 1999. Eagletech's limited operating history makes an
evaluation of Eagletech's future prospects very difficult. Eagletech will
encounter the risks and difficulties frequently encountered by early stage
companies in new and rapidly evolving markets. Eagletech cannot be certain that
Eagletech's business strategy will be successful or that Eagletech will
successfully address these risks.
QUALIFIED REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. Our independent
certified public accountants' report on our financial statements for the period
ended March 31, 1999 states that the negative working capital and lack of
revenue from operations raise substantial doubt about Eagletech's ability to
continue as a going concern. Eagletech expects to begin generating revenue in
the second calendar quarter of 2000. See "Plan of Operations."
EAGLETECH ANTICIPATES FUTURE LOSSES AND NEGATIVE CASH FLOW. Eagletech expects
operating losses and negative cash flow to continue for the foreseeable future.
Eagletech anticipates its losses will increase significantly from current levels
because Eagletech expects to incur additional costs and expenses related to:
- brand development, marketing and other promotional activities;
- expansion of Eagletech's operations;
- continued development of Eagletech's technology, its website, the
systems that Eagletech uses to process customers' orders and payments
and Eagletech's computer network;
- geographic expansion of Eagletech's service area; and
- development of relationships with strategic business partners.
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As of December 31, 1999, Eagletech had an accumulated deficit during
the development stage of $(9,310,735). Eagletech incurred net losses of
$(9,018,952) and no sales in the nine months ended December 31, 1999.
Eagletech's ability to become profitable depends on Eagletech's ability to
generate and sustain sales while maintaining reasonable expense levels. If
Eagletech does achieve profitability, Eagletech cannot be certain that Eagletech
would be able to sustain or increase profitability on a quarterly or annual
basis in the future. See Item 2-"Plan of Operations."
EAGLETECH'S LIMITED OPERATING HISTORY MAKES FUTURE FORECASTING DIFFICULT.
Because of Eagletech's limited history as a development stage company with no
revenues from operations, Eagletech finds it difficult to forecast its net sales
accurately. Eagletech has limited meaningful historical financial data upon
which to base planned operating expenses, since it (including its predecessor)
has been in the development stage without sales since 1996. Eagletech bases
Eagletech's current and future expense levels on Eagletech's operating plans and
estimates of future net sales, and Eagletech's expenses are to a large extent
fixed. Sales and operating results are difficult to forecast because they
generally depend on the volume and timing of the orders Eagletech receives.
Consequently, Eagletech may be unable to adjust Eagletech's spending in a timely
manner to compensate for any unexpected revenue shortfall. This inability could
cause Eagletech's net losses in a given quarter to be greater than expected.
EAGLETECH'S OPERATING RESULTS ARE EXPECTED TO BE VOLATILE AND DIFFICULT TO
PREDICT. IF EAGLETECH FAILS TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS
AND INVESTORS, THE MARKET PRICE OF EAGLETECH'S COMMON STOCK MAY DECREASE
SIGNIFICANTLY. Eagletech's annual and quarterly operating results may fluctuate
significantly in the future due to a variety of factors, many of which are
outside of Eagletech's control, including, among other things, the demand for
Eagletech's products, unpredictability of consumer trends and technology
changes. Because Eagletech's operating results are expected to be volatile and
difficult to predict, Eagletech believes that quarter-to-quarter comparisons of
Eagletech's operating results are not a good indication of Eagletech's future
performance. It is likely that in some future quarter Eagletech's operating
results may fall below the expectations of securities analysts and investors. In
this event, the trading price of Eagletech's Common Stock may fall
significantly. Factors that may harm Eagletech's business or cause Eagletech's
operating results to fluctuate include the following:
- Eagletech's inability to obtain new customers at reasonable cost and
retain existing customers;
- decreases in the funds available for marketing and promoting
Eagletech's services;
- Eagletech's inability to manage rapid expansion of its services;
- Eagletech's inability to adequately maintain, upgrade and develop
Eagletech's technical systems;
- the ability of Eagletech's competitors to offer new or enhanced
services or products;
- price competition;
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- an unanticipated high level of service cancellations;
- the termination of existing, or failure to develop new, strategic
marketing and manufacturing relationships;
- increases in the cost of advertising;
- the amount and timing of operating costs and capital expenditures
relating to expansion of Eagletech's operations;
- technical difficulties, system downtime or telephone service
interruptions.
A number of factors will cause Eagletech's gross margins to fluctuate in
future periods, including timing of service area expansion, the mix of services
provided by Eagletech and the level of discount or introductory pricing. Any
change in one or more of these factors could harm Eagletech's gross margins and
operating results in future periods.
EAGLETECH'S NET SALES ARE DEPENDENT UPON EAGLETECH'S ABILITY TO OFFER
EAGLETECH'S CUSTOMERS DEPENDABLE QUALITY SERVICES AT COMPETITIVE PRICES. If
Eagletech is not able to offer Eagletech's customers dependable services at
competitive prices, Eagletech's net sales and results of operations will be
harmed. Eagletech's success depends on Eagletech's ability to provide dependable
service to its customers at competitive prices.
IF EAGLETECH IS UNABLE TO OBTAIN SUFFICIENT QUANTITIES OF PRODUCTS FROM
EAGLETECH'S KEY VENDORS, EAGLETECH'S NET SALES WOULD BE ADVERSELY AFFECTED. If
Eagletech was unable to obtain sufficient quantities of electronic components
from Eagletech's key vendors, Eagletech's net sales and results of operations
would be harmed. Eagletech buys its electronic components from one vendor at
this time, but Eagletech believes that multiple other sources of such components
exist and finding replacement vendors would not have a material adverse effect
upon Eagletech.
TO MANAGE EAGLETECH'S GROWTH AND EXPANSION, EAGLETECH NEEDS TO IMPROVE AND
IMPLEMENT EAGLETECH'S SYSTEMS, PROCEDURES AND CONTROLS. IF EAGLETECH IS UNABLE
TO DO SO SUCCESSFULLY, EAGLETECH'S BUSINESS WOULD BE SERIOUSLY HARMED.
Eagletech's rapid growth in operations will place a significant strain on
Eagletech's management, information systems and resources. In order to manage
this growth effectively, Eagletech needs to continue to improve Eagletech's
financial and managerial controls and reporting systems and procedures.
Eagletech's failure to successfully implement, improve and integrate these
systems and procedures would harm Eagletech's results of operations.
EAGLETECH MAY NOT BE ABLE TO COMPETE SUCCESSFULLY AGAINST CURRENT AND FUTURE
COMPETITORS. Eagletech faces competition from some of the largest
telecommunications companies in the United States. The telecommunications market
is rapidly evolving and intensely competitive. Increased competition is likely
to result in price reductions, reduced gross margins and loss of market share,
any of which could seriously harm Eagletech's net sales and results of
operations. Eagletech expects competition to intensify in the future as
telecommunications deregulation continues, regional Bell companies expand
nationwide and cellular services become more common.
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Many of Eagletech's competitors have longer operating histories, larger
customer or user bases, greater brand recognition and significantly greater
financial, marketing and other resources than does Eagletech. Many of these
competitors can devote substantially more resources to marketing and promotion
than can Eagletech. In addition, larger, well-established and well-financed
telecommunications companies, cable suppliers and cellular telephone companies
may try to offer competing services. Eagletech's competitors may be able to
secure products from vendors on terms that are more favorable and adopt more
aggressive pricing policies than can Eagletech.
IF EAGLETECH DOES NOT SUCCESSFULLY EXPAND EAGLETECH'S SERVICE AREA, EAGLETECH'S
BUSINESS COULD BE SERIOUSLY HARMED. If Eagletech does not successfully expand
Eagletech's service area and number of lines its service bureaus can
accommodate, Eagletech will not be able to increase Eagletech's net sales in
accordance with the expectations of securities analysts and investors. In such
an event, Eagletech's business will be harmed. Eagletech's success depends on
Eagletech's ability to expand Eagletech's service area and switching capacity
rapidly in order to accommodate a significant increase in customer orders.
Eagletech's planned expansion may cause disruptions that could harm Eagletech's
business, results of operations and financial condition.
EAGLETECH'S FACILITIES AND SYSTEMS ARE VULNERABLE TO NATURAL DISASTERS AND OTHER
UNEXPECTED PROBLEMS. The occurrence of a hurricane, tornado, large scale
electrical storm or other natural disaster or unanticipated problems at
Eagletech's leased facility in Ft. Lauderdale, Florida that houses substantially
all of Eagletech's computer and communications hardware systems, could cause
interruptions or delays in Eagletech's business, loss of data or render
Eagletech unable to provide its services. Any such interruptions or delays at
its facility would harm Eagletech's net sales and results of operations. In
addition, Eagletech's systems and operations are vulnerable to damage or
interruption from fire, flood, power loss, telecommunications failure,
break-ins, and similar events. Eagletech has no formal disaster recovery plan
and Eagletech's business interruption insurance may not adequately compensate
Eagletech for losses that may occur. The occurrence of any or all of the events
could harm Eagletech's reputation, brand and business.
IF EAGLETECH DOES NOT RESPOND TO RAPID TECHNOLOGICAL CHANGES, EAGLETECH'S
SERVICES COULD BECOME OBSOLETE AND EAGLETECH'S BUSINESS WOULD BE SERIOUSLY
HARMED. If Eagletech faces material delays in introducing new services, products
and enhancements, Eagletech's customers may forego the use of Eagletech's
services and use those of Eagletech's competitors. To remain competitive,
Eagletech must continue to enhance and improve the functionality and features of
Eagletech's telecommunications services. The telecommunications industry is
rapidly changing as a result of deregulation, technology improvements and new
customer demands. If competitors introduce new products and services embodying
new technologies, or if new industry standards and practices emerge, Eagletech's
existing proprietary technology and systems may become obsolete. Developing,
enhancing and upgrading Eagletech's proprietary technology entails significant
technical and business risks. Eagletech may use new technologies
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ineffectively or Eagletech may fail to adapt Eagletech's proprietary technology
and Eagletech's computer network to customer requirements or emerging industry
standards.
INTELLECTUAL PROPERTY CLAIMS AGAINST EAGLETECH COULD BE COSTLY AND COULD RESULT
IN THE LOSS OF SIGNIFICANT RIGHTS. Other parties may assert infringement or
unfair competition claims against Eagletech. Eagletech cannot predict whether
third parties will assert claims of infringement against Eagletech, or whether
any future assertions or prosecutions will harm Eagletech's business. If
Eagletech is forced to defend against any such claims, whether they are with or
without merit or are determined in Eagletech's favor, then Eagletech may face
costly litigation, diversion of technical and management personnel, or product
shipment delays. Because of such a dispute, Eagletech may have to develop
non-infringing technology or enter into royalty or licensing agreements. Such
royalty or licensing agreements, if required, may be unavailable on terms
acceptable to Eagletech, or at all. If there is a successful claim of product
infringement against Eagletech and Eagletech is unable to develop non-infringing
technology or license the infringed or similar technology on a timely basis, it
could harm Eagletech's business.
IF THE PROTECTION OF EAGLETECH'S TECHNOLOGY, TRADEMARKS AND PROPRIETARY RIGHTS
IS INADEQUATE, EAGLETECH'S BUSINESS WILL BE SERIOUSLY HARMED. The steps
Eagletech takes to protect Eagletech's proprietary rights may be inadequate.
Eagletech regards Eagletech's copyrights, service marks, trademarks, trade
dress, trade secrets and similar intellectual property as critical to
Eagletech's success. In addition, Eagletech has filed for patent protection for
its proprietary technology and has received a Notice of Allowance regarding its
patent application. Eagletech will pay the Issue Fee and the patent will issue
in the near future. Eagletech relies on trademark and copyright law, trade
secret protection and confidentiality or license agreements with Eagletech's
employees, customers, partners and others to protect Eagletech's proprietary
rights. Eagletech is in the process of filing for trademark protection for
"Eagletech" for telecommunications services. Effective patent, trademark,
service mark, copyright and trade secret protection may not be available in
every country in which Eagletech will sell Eagletech's products and services.
THE LOSS OF THE SERVICES OF ONE OR MORE OF EAGLETECH'S KEY PERSONNEL, OR
EAGLETECH'S FAILURE TO ATTRACT, ASSIMILATE AND RETAIN OTHER HIGHLY QUALIFIED
PERSONNEL IN THE FUTURE WOULD SERIOUSLY HARM EAGLETECH'S BUSINESS. The loss of
the services of one or more of Eagletech's key personnel could seriously harm
Eagletech's business. Eagletech depends on the continued services and
performance of Eagletech's senior management and other key personnel,
particularly Robert Dobbs, Eagletech's President and Chief Executive Officer,
and Rodney Young, Eagletech's Vice-President for Technology and the inventor of
Eagletech's proprietary technology. Eagletech's future success also depends upon
the continued service of Robert Bergman, Eagletech's Vice President for
Marketing and Sales, and the services of other essential technical, sales,
marketing and support personnel. All of Eagletech's officers and key employees
are bound by employment agreements. Eagletech does not have "key person" life
insurance policies covering any of Eagletech's employees.
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EAGLETECH MAY BE ADVERSELY IMPACTED IF THE SOFTWARE, COMPUTER TECHNOLOGY AND
OTHER SYSTEMS EAGLETECH USES ARE NOT YEAR 2000 COMPLIANT. Any failure of
Eagletech's material systems, Eagletech's vendors' material systems or the
Internet to be Year 2000 compliant would have material adverse consequences for
Eagletech. Such consequences would include difficulties in providing switching
or conducting other fundamental parts of Eagletech's business. Eagletech has
determined that all of its material systems are Year 2000 compliant and has
received assurances that its vendors' systems are Year 2000 compliant also.
Eagletech also depends on the Year 2000 compliance of the computer systems and
financial services used by consumers and by telecommunications companies with
which its systems operate. A significant disruption in the ability of consumers
to reliably access their telecommunications system or portions of it would have
an adverse effect on demand for Eagletech's services and would have a material
adverse effect on Eagletech. See Item 2-"Plan of Operations."
RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS. If Eagletech is presented with
appropriate opportunities, Eagletech intends to make investments in
complementary companies, products or technologies. Eagletech may not realize the
anticipated benefits of any acquisition or investment. If Eagletech buys a
company, Eagletech could have difficulty in assimilating that company's
personnel and operations. In addition, the essential personnel of the acquired
company may decide not to work for Eagletech. If Eagletech makes other types of
acquisitions, Eagletech could have difficulty in assimilating the acquired
technology or products into Eagletech's operations. These difficulties could
disrupt Eagletech's ongoing business, distract Eagletech's management and
employees and increase Eagletech's expenses. Furthermore, Eagletech may have to
incur debt or issue equity securities to pay for any future acquisitions or
investments, the issuance of which could be dilutive to Eagletech or Eagletech's
existing stockholders.
EXISTING STOCKHOLDERS WILL BE ABLE TO EXERCISE SIGNIFICANT CONTROL OVER
EAGLETECH. Executive officers, directors and entities affiliated with them, if
acting together, would be able to significantly influence all matters requiring
approval by Eagletech's stockholders, including the election of directors and
the approval of mergers or other business combination transactions. These
stockholders, taken together, beneficially own approximately 59% of Eagletech's
outstanding common stock and can elect all directors and pass any action
requiring stockholder approval. See Item 4. "Security Ownership of Certain
Beneficial Owners and Management" and Item 5 "Directors, Executive Officers,
Promoters and Control Persons."
IT MAY BE DIFFICULT FOR A THIRD PARTY TO ACQUIRE EAGLETECH. Provisions of
Eagletech's Certificate of Incorporation, Eagletech's Bylaws and Nevada law
could make it more difficult for a third party to acquire Eagletech, even if
doing so would be beneficial to Eagletech's stockholders. See Item 8,
"Description of Securities."
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RISKS RELATED TO EAGLETECH'S INDUSTRY
EAGLETECH MAY NEED TO CHANGE THE MANNER IN WHICH EAGLETECH CONDUCTS EAGLETECH'S
BUSINESS IF GOVERNMENT REGULATION INCREASES. The adoption or modification of
laws or regulations relating to the telecommunications industry could adversely
affect the manner in which Eagletech currently conducts Eagletech's business. In
addition, the growth and development of the market for enhanced
telecommunications systems may lead to more stringent consumer protection laws,
both in the United States and abroad, that may impose additional burdens on
Eagletech. Laws and regulations directly applicable to telecommunications are in
a constant state of flux.
RISKS RELATED TO SECURITIES MARKETS
EAGLETECH MAY BE UNABLE TO MEET EAGLETECH'S FUTURE CAPITAL REQUIREMENTS.
Eagletech cannot be certain that additional financing will be available to
Eagletech on favorable terms when required, or at all. If Eagletech raises
additional funds through the issuance of equity, equity-related or debt
securities, such securities may have rights, preferences or privileges senior to
those of the rights of Eagletech's Common Stock and Eagletech's stockholders may
experience additional dilution. Eagletech requires substantial working capital
to fund Eagletech's business. Since Eagletech's inception, Eagletech has
experienced negative cash flow from operations and expects to experience
significant negative cash flow from operations for the foreseeable future.
Eagletech currently anticipates that Eagletech's available funds will be
sufficient to meet Eagletech's anticipated needs for working capital and capital
expenditures through at least the next 6 months. Eagletech may need to raise
additional funds before the expiration of such period.
EAGLETECH MAY BE UNABLE TO CONTINUE OPERATIONS IF OUR FINANCIAL DIFFICULTIES
PRECLUDE EAGLETECH FROM FUNDING OUR OPERATIONS. The report of Eagletech's
independent certified public accountants as of March 31, 1999 expressed
substantial doubt about Eagletech's ability to continue as a going concern.
Their report is included as part of our financial statements. The concern stems
from Eagletech's recurring net losses for the years ended March 31, 1999 and
1998, and that as of March 31, 1999, Eagletech's current liabilities exceeded
its current assets by $291,781. In addition, Eagletech incurred net losses of
$9,024,701 during the nine months ended December 31, 1999. Eagletech's continued
existence is dependant upon its ability to resolve its liquidity problems,
principally by obtaining capital, commencing sales of its services and
generating sufficient revenues to become profitable. See, "Plan of Operations."
EAGLETECH'S COMMON STOCK PRICE MAY BE VOLATILE, WHICH COULD RESULT IN
SUBSTANTIAL LOSSES FOR INDIVIDUAL STOCKHOLDERS. The market price for Eagletech's
common stock is likely to be highly volatile and subject to wide fluctuations in
response to factors including the following, some of which are beyond
Eagletech's control:
- actual or anticipated variations in Eagletech's quarterly operating
results;
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<PAGE> 13
- announcements of technological innovations or new products or services
by Eagletech or Eagletech's competitors;
- changes in financial estimates by securities analysts;
- conditions or trends in the telecommunications industry;
- changes in the economic performance and/or market valuations of other
independent telecommunications companies;
- announcements by Eagletech or Eagletech's competitors of significant
acquisitions, strategic partnerships, joint ventures or capital
commitments;
- additions or departures of key personnel;
- release of lock-up or other transfer restrictions on Eagletech's
outstanding shares of common stock or sales of additional shares of
common stock; and
- potential litigation.
IF EAGLETECH'S STOCK PRICE IS VOLATILE, EAGLETECH COULD FACE A SECURITIES CLASS
ACTION LAWSUIT. In the past, following periods of volatility in the market price
of their stock, many companies have been the subjects of securities class action
litigation. If disgruntled stockholders sued Eagletech in a securities class
action, it could result in substantial costs and a diversion of management's
attention and resources and would harm Eagletech's stock price.
SUBSTANTIAL SALES OF EAGLETECH'S COMMON STOCK COULD CAUSE EAGLETECH'S STOCK
PRICE TO FALL. If Eagletech's stockholders sell substantial amounts of
Eagletech's Common Stock in the public market, the market price of Eagletech's
Common Stock could fall. Such sales also might make it more difficult for
Eagletech to sell equity or equity-related securities in the future at a time
and price that Eagletech deems appropriate.
CONFLICTS OF INTEREST. Officers and directors of Eagletech may in the future
participate in business ventures that could be deemed to compete directly with
Eagletech. Additional conflicts of interest and non-arms length transactions may
also arise in the future in the event Eagletech's officers or directors are
involved in the management of any firm with which Eagletech transacts business.
Eagletech has adopted a policy that Eagletech will not seek a merger with, or
acquisition of, any entity in which members of Eagletech's management serve as
officers, directors or partners, or in which they or their family members own or
hold any material ownership interest.
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. Sections 13 and 5(d)
of the Exchange Act require companies subject thereto to provide certain
information about significant acquisitions, including certified financial
statements for the company acquired, covering one, two, or three years,
depending on the relative size of the acquisition. The time and additional costs
that may be incurred by some target entities to prepare such statements may
significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by Eagletech. Acquisition prospects that do not have or
are unable to obtain the required audited statements may not be appropriate for
acquisition so long as the reporting requirements of the 1934 Act are
applicable.
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<PAGE> 14
Item 2. Plan of Operation
OVERVIEW
Eagletech was founded to manufacture, market and distribute unique
communications products and services. We recognized an opportunity to develop a
messaging service and a low cost call management product that could handle voice
mail, call-forwarding and call screening at a reasonable cost. Currently, many
mobile and remote professionals (i.e., professionals who do not work out of a
fixed office) have cellular telephones, pagers, portable computers, email and
corporate voice mail in order to stay in contact with co-workers and customers
when out of the office. Eagletech provides services that Eagletech believes
increase customer productivity and efficiency by making its customers more
accessible. Eagletech has begun signing up customers for "EagleOne" TM service
bureau services and has begun operating its customized real estate systems.
Eagletech delivers an array of communications services that work with a
customer's existing communications equipment or as a stand-alone solution.
Because of the proprietary manner in which Eagletech delivers these services,
Eagletech believes it is the low cost communications service provider compared
with its competitors, based on publicly available pricing information. As
described below, under "Competition," Eagletech's patent-pending technology uses
only one telephone line and all other competitors use up to seven lines to
provide the same service. The United States Patent and Trademark Office has
issued a Notice of Allowance for Eagletech's patent on its proprietary system.
Eagletech's main product is its "EagleOne" TM flat rate service, which
includes:
o One Number-Follow Me"- Allows a caller, by dialing
one number, to be transferred automatically to up to
four telephone numbers in search of the caller's
intended party. In this way, a caller is able to
reach Eagletech's customer at a place of business,
cellular telephone, home or other alternative
numbers.
o "EagleAttendant" TM- Autoattendant greeting with a
custom recorded business greeting. Even when our
customer is not available, his or her telephone is
answered in a professional manner.
o "EagleAnnounce" TM - Screens calls, when the caller
announces his or her name, the user has the ability
to take important calls and send others to voice
mail.
o "EagleMail" TM - Voice mail service--callers have the
option to leave a detailed message of up to five
minutes in length. Calls are automatically deleted
after 30 days.
o "EagleMessage" TM - EagleMail TM messages are
delivered within minutes. Messages are re-delivered
until you are found. The customer specifies how often
and how many times deliveries are attempted.
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<PAGE> 15
o "EagleWeb" TM - Customers can set up and make changes
to transfer numbers, message delivery specifications
and the like using the Internet, or when on the road,
from a cellular telephone. Messages can be delivered
to a customer's email address and heard on a
multimedia computer.
o "EagleFax" TM - Store and forward your faxes to any
fax machine. EagleFax TM will notify you when you
have received a fax.
There are two distinct markets for Eagletech's products. The first is
integration of Eagletech's services into a customer's existing
telecommunications system. Eagletech has targeted the real estate brokerage
market for the first implementation of these customized solutions, where it is
absolutely critical for a broker to be reached by a client. The customized real
estate product provides for not only "One Number-Follow Me" service but also
other features appropriate for this class of customers such as "Talking Signs",
"Talking Ads", fax-back information and the ability to capture Caller ID
information from home buyers who respond to a Talking Sign or Talking Ad. The
first two real estate systems are operational in the Ft. Lauderdale area.
The second market consists of potential customers who are not part of a
larger organization that provides these types of communications services.
Eagletech has developed a service bureau to provide individuals with the full
range of its services in given geographic areas. Eagletech houses its existing
service bureau equipment at the local telephone service provider's switching
facilities in Ft. Lauderdale, Florida, which determines the geographic area in
which Eagletech will provide its services. This equipment was installed in the
first quarter of 2000 and Eagletech is currently testing this installation.
Eagletech has begun to sign-up subscribers for this service and will activate
the system on May 1, 2000. Later in May, 2000, Eagletech intends to expand its
service bureau services to parts of Dade County as well.
The EagleOne TM service bureau product provides a universal local
number that connects the business professional, wherever he or she is working,
to important calls and messages. There no longer is a need for a pager since the
business professional will have the call forwarded to wherever that professional
is, have the call announced and then the professional will decide whether to
take the particular call or have it forwarded to voice mail.
Eagletech is offering these services through independent cellular
telephone dealers in Broward and Dade counties. For each customer who decides to
use the service, the dealer receives a commission together with a residual
income from the monthly revenue stream generated by the customer.
The experience in Dade and Broward Counties together with the
experience at corporate accounts will be instrumental in obtaining a strategic
partner for the EagleOneTM product. This strategic partner could be a retail
chain that sells a significant amount of telecommunications equipment or a
partner capable of bundling this product with their
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<PAGE> 16
own telecommunications products. Alternatively, Eagletech can contract with
independent sales representatives on a commission only basis to market and sell
the EagleOne TM service bureau product to independent cellular telephone
dealers. In either event, Eagletech intends to roll-out EagleOne TM to the major
metropolitan regions of the country, starting from its south Florida base to the
nine state BellSouth service area once it obtains sufficient funding.
PLAN OF OPERATIONS
Over the next twelve months, Eagletech intends to continue to roll-out
its EagleOne TM service bureau product throughout the Southeastern United
States. Eagletech believes that such an expansion will require substantial
investment in equipment and administrative personnel. Marketing, technical
assistance and manufacturing will continue to be outsourced. Because Eagletech
has its equipment manufactured by a third party under a fixed-cost contract,
Eagletech can estimate the cost of producing new service bureaus. Eagletech must
negotiate with local telephone service providers to site equipment. Eagletech
has received a "Notice of Allowance" from the United States Patent and Trademark
Office for its patent on its core technology that allows the use of one
telephone line for "One Number, Follow Me" service. Although Eagletech intends
to continually update and refine its products and services to increase customer
satisfaction, Eagletech does not need additional research and development to
have an operational service bureau in place.
LIQUIDITY AND CAPITAL RESOURCES
On the date of this filing, Eagletech has cash resources of
approximately $275,000 and no long-term debt or currently due debt, except for
normal trade payables. Based on Eagletech's existing expenses, this is
sufficient capital for 5 months of operations if Eagletech generated no revenues
from operations. Eagletech expects to begin to receive cash flow from operations
beginning in May 2000 of approximately $125,000 per month. On this basis, if
Eagletech did not expand beyond its present size, Eagletech could operate on a
profitable basis, but Eagletech's expansion beyond its present market would be
extremely slow.
In the next twelve months, however, Eagletech plans to greatly expand
its operations and is in negotiations with two sources of additional financing
to raise approximately $6,000,000 through the sale of equity to fund the
national roll-out of the EagleOne TM service bureau product. Eagletech believes
that this additional funding will allow us to expand the EagleOne TM service
bureau product to an additional 25 markets in the 9 state BellSouth service
area. Of this funding, approximately $3,000,000 will be used for purchase of
equipment, $1,500,000 for marketing and $1,500,000 for general working capital.
Eagletech may need to hire additional administrative and customer service
personnel as part of this expansion.
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<PAGE> 17
COMPETITION
Eagletech competes with a variety of companies that provide some type
of message services. There are a number of turnkey voice mail systems available
on the market, the majority featuring expensive, high density equipment focused
on larger businesses. There are also several excellent software products on the
market but require programming experience and are aimed at developers and not
end users.
Eagletech's competitors include voice mail service bureaus, which are
typically local paging companies that offers basic voice mail/pager notification
mailboxes at bargain prices but without advanced features. These services
require the user to call in for voice mail messages and do not automatically
connect calls. AT&T, MCI and MCI-WorldCom offer "One Number- Follow Me" service
bureaus, but they require the caller to enter a PIN number and are sold as
measured rate service -- $0.27 peak to $0.15 off peak per minute. Inexpensive
local flat rate service of the type provided by Eagletech is not available.
These services are similar in that the system accepts the call, places the
caller on hold and then opens a second line to call the subscriber. If that call
does not connect, the system opens another line to try a second number, and so
on. Once the parties are connected, the call remains routed through the system
hardware until the call is completed, tying up available lines.
In contrast, Eagletech's proprietary technology uses only one line for
both the incoming and outgoing call and, once the parties are connected, the
system is able to free-up that line for the next call. In this way, Eagletech
believes that its system makes much more efficient use of available telephone
lines and thus Eagletech is able to provide its services for one flat rate per
month of $24.95.
Two communication provider companies offer competing products to
Eagletech. The first is Wildfire Communications, which develops and markets the
Wildfire Electronic Assistant, which uses speech recognition to manage
telephone, fax and email communications. Wildfire mimics a personal assistant,
taking messages and telephone numbers if users are unable to personally answer.
Wildfire can follow spoken instructions and also make and take calls. As the
service is used increasingly, Wildfire develops and adapts to a user's personal
requirements, building up a personal list of names and numbers. Wildfire can
store up to 150 personal contacts. Wildfire will automatically call one of the
stored numbers when instructed by the user. Wildfire requires a great deal of
computing power and therefore is very expensive. Monthly charges normally exceed
$300. Further, a headset is necessary for clarity in speech recognition. This
product has been marketed for over two years but has received minimal market
acceptance. Eagletech does not know the number of users subscribed to the
Wildfire service.
Linx Communications is a national communications service provider
offering businesses and consumers local and toll-free access to a suite of
communications products and services through the telephone or Internet. Linx
offers customizable communication services that allow individuals to connect to
important callers and gives them access to
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messages with one local or toll free telephone number or Internet connection.
Linx provides a single point of access, through the telephone or the Internet,
for all voice messages, faxes and email. When a caller dials a user's
LinxConnect number the system rings up to three user-specified numbers
simultaneously and announces the caller. The user can choose to take the call,
send it to voice mail, or transfer the call to a colleague. For faxes, users can
send an incoming fax to specified machines or hold it in queue for printing
later.
LinxConnect is currently available in Boston, New York, San Francisco,
Los Angeles and Washington, D.C. Linx expects to expand service to 14 additional
cities in 1999 including Atlanta, Chicago and Dallas. The basic charge for
LinxConnect, the equivalent "One Number Follow-Me " service of EagleOne, is $
24.95 a month plus a set-up fee of $ 24.95. In addition there is a measured
meter rate charge of $ .15 per minute for long distance calls. Through the first
year of marketing, the average bill was $ 50 to $ 75 per month. In 1998, Linx
had 2500 subscribers, $1 million in revenues and lost $1 million. In 1999, Linx
grew its subscriber base to 5,000 subscribers.
There are important differences between the EagleOne TM and
LinxConnect. LinxConnect rings three numbers simultaneously while EagleOne rings
them in sequence. The LinxConnect configuration requires the use of multiple
lines at once, thereby limiting the number of subscribers possible per switch to
less than the 300 possible if only two lines are being used. EagleOne's TM
proprietary switching configuration permits at least 1500 subscribers per
switch, thereby insuring a substantial cost advantage to Eagletech in providing
these services. Further, the LinxConnect service includes a measured meter rate
component for long distance calls, which may result in the user paying more per
minute than under his or her current long distance provider. Eagletech
anticipates that EagleOneTM will be profitable without the need for additional
margin from the measured meter rate service.
Neither Wildfire nor LinxConnect is available in Ft. Lauderdale,
Florida.
Eagletech has 4 full time and 1 part time employees and operates one
facility at 305 South Andrews Avenue, Fort Lauderdale, Florida used as the
principal corporate office and the site of its initial service bureau.
Eagletech has significant capital needs, which to date Eagletech has
met through private sales of its equity and loans. Eagletech will continue to
need substantial infusions of capital, which it expects to continue to fund
primarily from private sales of its equity and loans, or by a public offering of
its equity or debt securities. Eagletech is in negotiations with two sources of
additional financing to raise approximately $6,000,000 through the sale of
equity to fund the national roll-out of the EagleOne TM service bureau product.
Eagletech believes that this additional funding will allow us to expand the
EagleOne TM service bureau product to an additional 25 markets in the 9 state
BellSouth service area. Of this possible funding, approximately $3,000,000 will
be used for purchase of equipment, $1,500,000 for marketing and $1,500,000 for
general working capital.
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Eagletech may need to hire additional administrative and customer service
personnel as part of this expansion.
Item 3. Description of Property
Eagletech leases one facility located at 305 South Andrews Avenue, Fort
Lauderdale, Florida as an office and service bureau facility. The facility
contains approximately 1,000 square feet total, of which 900 square feet are
used for office space and 100 square feet are used to house equipment. The lease
on this facility expires June 30, 2004 and the annual lease payments are $30,000
for the entire facility.
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth the beneficial ownership for Eagletech's
sole class of Common Stock of Eagletech beneficially owned by all directors,
officers and 5% or more holders.
<TABLE>
<CAPTION>
Name and
Address of Nature of
Beneficial Beneficial Number of
Owner Ownership Shares Percent
- ------------------ -------------------------- --------- -------
<S> <C> <C> <C>
Robert J. Dobbs (1) Record 100,000 1.0%
Rodney E. Young (1) (2) Record and Beneficial 2,775,001 29.0%
Robert A. Bergman (1) Record 25,000 0.3%
James Payne (1) (3) Record and Beneficial 2,575,001 26.5%
Thomas Kessler (1) (4) Record and Beneficial 666,668 6.9%
Kenneth L. Payne (1) (4) Record and Beneficial 200,000 2.1%
Christopher P. Flannery (1) Record and Beneficial 0 0.0%
</TABLE>
(1) Address c/o Eagletech at 305 South Andrews Avenue, Fort Lauderdale,
Florida.
(2) Mr. Young's total includes 853,330 shares owned by members of his
immediate family as to which he disclaims beneficial ownership.
(3) Mr. James Payne's total includes 536,300 shares owned by members of his
immediate family as to which he disclaims beneficial ownership.
(4) Mr. Kessler is Managing Director of Lloyds Bahamas Securities, Inc.,
which holds 666,668 shares as to which he disclaims beneficial
ownership.
(5) Mr. Kenneth Payne's holdings include 100,000 shares owned by members of
his immediate family as to which he disclaims beneficial ownership.
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Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and officers of Eagletech are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Robert J. Dobbs 40 President, Chairman of the Board
and Director
Rodney E. Young 48 Vice President of Technology and Director
Robert A. Bergman 49 Vice President- Sales and Marketing
Thomas Kessler 57 Director
Kenneth L. Payne 40 Director
Christopher P. Flannery 43 Director
</TABLE>
ROBERT J. DOBBS. Mr Dobbs became President and Chairman of the Board of
Eagletech in April, 1999. Mr. Dobbs has been owner and President of ATNEX
Business Solutions, Inc., Fort Lauderdale, Florida since 1997. In this capacity,
Mr. Dobbs was responsible for all operations of a regional management consulting
firm specializing in providing corporate re-engineering and business solutions.
In this role, Mr. Dobbs served as interim chief operating officer for several
companies providing day to day management of all corporate operations and
financial/reporting accountability to the company's shareholders. Mr. Dobbs was
responsible for increased corporate profits, reduction of overhead and
improvement in company's Dun & Bradstreet credit rating. ATNEX is currently
inactive and all of Mr. Dobbs' professional time and efforts are devoted to
Eagletech.
From 1995 to 1997, he served as Vice President, First Union National
Bank, Fort Lauderdale, Florida where he was responsible for corporate revenue
generation through the distribution of commercial credit, capital markets
solutions and comprehensive cash management platforms to senior-level executives
and managers of small and middle market size companies located in the South
Florida Region.
From 1986 to 1995, Mr. Dobbs served as Senior Vice President, SunTrust
Bank, Washington, DC. He is a graduate of The American University Kogod School
of Business. During his military career, while in the United States Army, Mr.
Dobbs served on the Presidential Honor Guard.
RODNEY E. YOUNG. Mr. Young is a founder of Eagletech and has been engaged in
developing Eagletech's technology since 1996. From 1989-1996, Mr. Young was
owner and president of Eagle/Century Development Corp., Fort Lauderdale,
Florida. There he developed the concept behind the EagleOneTM service.
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THOMAS R. KESSLER. Mr. Kessler was named a director of Eagletech in September,
1999. Since 1994, Mr. Kessler has been a Director of Montaque Securities
International Limited, Nassau, The Bahamas. Mr. Kessler has been Managing
Director of Lloyds Bahamas Securities, Inc., a securities brokerage firm located
in Nassau, the Bahamas, since 1998. Previously he was General Manager of the
Euro Canadian Bank, Nassau, The Bahamas.
Mr. Kessler is a graduate of Kent State University (B.S. and M.A.) and
the Cleveland Marshall College of Law (J.D.).
KENNETH L. PAYNE. Kenneth L. Payne became a director of Eagletech in September,
1999. Since 1989, Mr. Payne has served as Vice President and General Manager for
Main Street Realty Inc., a real estate development company in Knoxville,
Tennessee.
Mr. Payne is a licensed Certified Public Accountant (CPA) and is a
member of the American Institute of Certified Public Accountants, the Kentucky
Society of CPAs, where he has also served as a member of the Federal Taxation
Committee, and the Tax division of the AICPA. Mr. Payne is a graduate of the
University of Louisville and is a native of Louisville.
CHRISTOPHER P. FLANNERY Mr. Flannery was named a director of Eagletech in
September, 1999. Mr. Flannery has practiced corporate and business law, with an
emphasis on securities, since 1984, first in New York and now in Philadelphia.
Mr. Flannery is an attorney with Astor, Weiss, Kaplan & Rosenblum, LLP in Center
City Philadelphia. Mr. Flannery has written for Philadelphia Enterpriser
Magazine and Mergers & Acquisitions. Mr. Flannery has been a principal speaker
in numerous programs for the profession and for entrepreneurs on corporate
finance and securities issues.
Mr. Flannery graduated from the Cornell Law School in 1981. In 1978,
Mr. Flannery received his B.A., magna cum laude, from LeMoyne College in
Syracuse, New York majoring in History and French, with minors in Political
Science and Philosophy.
ROBERT A. BERGMAN. Mr. Bergman became Eagletech's Vice President of Sales and
Marketing in June, 1999. Mr. Bergman has been actively involved with sales and
marketing for major investment banking firms, as well as marketing benefit
enhancement products in the managed care and insurance marketplace. His
background includes experience in employee benefits, estate planning and
insurance sales. Since 1994, he has been a self-employed sales and marketing
consultant in the insurance, energy and technology fields.
Mr. Bergman has a B.A. in Business Administration from Temple
University and pursued graduate studies at the Wharton School of Business. He is
actively involved within his community and serves as a Board Member of
Associated Day Care Services.
The above listed directors will serve until the next annual meeting of
the stockholders or until their death, resignation, retirement, removal, or
disqualification, and
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until their successors have been duly elected and qualified. Our executive
officers serve at the discretion of the Board of Directors. Vacancies in the
existing Board of Directors are filled by majority vote of the remaining
Directors. Officers of Eagletech serve at the will of the Board of Directors.
There are no agreements or understandings for any officer or director to resign
at the request of another person and no officer or director is acting on behalf
of or will act at the direction of any other person. There is no family
relationship between any executive officer or director of Eagletech.
Board Committees. The Board of Directors has not yet established any committees.
The Board intends to establish a Compensation Committee and an Audit Committee
at the next meeting of the Board of Directors.
Compensation Committee Interlocks And Insider Participation. The Board has not
yet established a Compensation Committee. The Board of Directors as a whole
performs this function.
Director Compensation. Eagletech's directors do not receive any cash or other
compensation for their service as members of the Board of Directors, although
they are reimbursed for travel and lodging expenses in connection with
attendance at Board meetings.
Item 6. Executive Compensation.
Executive Compensation. The following table sets forth the compensation received
for services rendered to Eagletech during the fiscal year ended March 31, 1999
by our former Chief Executive Officer. Eagletech had no officers who earned more
than $100,000 during the fiscal year ended March 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Name And Principal Annual Compensation Other Annual Long-Term All Other
Position Salary($) Bonus($) Compensation Compensation Awards
Compensation
- ------------------ ------------------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Rodney E. Young $45,000 $ 0 None None $600,000
</TABLE>
On June 15, 1999, Robert J. Dobbs, Jr. became Chairman of the Board,
President and Chief Executive Officer of Eagletech. Prior to this, in
anticipation of Mr. Dobbs' employment, on May 5, he was issued 100,000 shares of
restricted common stock as part of his employment agreement, valued at $600,000.
On an annual basis, Mr. Dobbs' initial salary would have been $75,000. On
September 25, 1999, the Board approved an
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<PAGE> 23
employment agreement with Mr. Dobbs whereby Mr. Dobbs will receive an annual
salary of $110,000, with a bonus only if granted by the Board of Directors.
Eagletech did not pay to our Chief Executive Officer or any executive
officer any compensation intended to serve as incentive for performance to occur
over a period longer than one year pursuant to a long-term incentive plan in the
fiscal year ended March 31, 1999. Eagletech does not have any defined benefit or
actuarial plan with respect to our Chief Executive Officer or any executive
officer under which benefits are determined primarily by final compensation and
years of service.
Option Grants
Eagletech did not issue any stock options to its Chief Executive
Officer or any executive officer in the fiscal year ended March 31, 1999.
None of Eagletech's directors receives any compensation for their
respective services rendered to Eagletech as directors, nor have they received
such compensation in the past. They all have agreed to act without compensation
until authorized by the Board of Directors. Further, none of the directors is
accruing any compensation under any agreement with Eagletech.
Item 7. Certain Relationships and Related Transactions.
As of March 31, 1999, Eagletech owed a total of $88,127 to Mr. Rod
Young, a director and greater than 5% stockholder and to Mr. James Payne, a
greater than 5% stockholder and brother of Kenneth Payne, a director. These
notes were demand notes bearing 7% interest. On December 31, 1999, payments by
Eagletech had reduced the total amount due to $33,902.
SUBSEQUENT EVENT. By March 31, 2000, Eagletech has totally paid off the
related party notes in full.
Members of Eagletech's management are associated with other firms
involved in a range of business activities. Consequently, there are potential
inherent conflicts of interest in their acting as officers and directors of
Eagletech. Insofar as the officers and directors are engaged in other business
activities, management anticipates it will devote only a minor amount of time to
Eagletech's affairs.
The officers and directors of Eagletech are now, and may in the future
become, stockholders, officers or directors of other companies that may be
engaged in business activities similar to those conducted by Eagletech.
Accordingly, additional direct conflicts of interest may arise in the future
with respect to such individuals acting on behalf of Eagletech or other
entities. Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individuals in the performance
of their duties or otherwise. Eagletech does not currently have a right of first
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refusal pertaining to opportunities that come to management's attention insofar
as such opportunities may relate to Eagletech's proposed business operations.
Item 8. Description of Securities.
Eagletech's authorized capital stock consists of 100,000,000 shares,
par value $.0001 per share. There are 9,950,240 shares of Common Stock issued
and outstanding as of the date of this filing. All shares of Common Stock have
equal voting rights and, when validly issued and outstanding, are entitled to
one vote per share in all matters to be voted upon by stockholders. The shares
of Common Stock have no preemptive, subscription, conversion or redemption
rights. Cumulative voting in the election of directors is not permitted, which
means that the holders of a majority of the issued and outstanding shares of
Common Stock represented at any meeting at which a quorum is present will be
able to elect the entire Board of Directors if they so choose and, in such
event, the holders of the remaining shares of Common Stock will not be able to
elect any directors. In the event of liquidation of Eagletech, each stockholder
is entitled to receive a proportionate share of Eagletech's assets available for
distribution to stockholders after the payment of liabilities and after
distribution in full of preferential amounts, if any. Holders of the Common
Stock are entitled to share pro rata in dividends and distributions with respect
to the Common Stock, as may be declared by the Board of Directors out of funds
legally available therefor.
PART II
Item 1. Market Price for Common Equity and Related Stockholder Matters.
Price quotations for Eagletech's Common Stock are posted presently on
the OTC Bulletin Board and have been since February, 1999. As soon as Eagletech
becomes eligible, Eagletech intends to request a listing for the Common Stock on
the NASDAQ SmallCap Market (TM). This listing requires certain asset, earnings
and per share price standards that Eagletech does not now meet. Eagletech can
give no assurance that it will meet these standards in the foreseeable future,
it at all.
(a) Market Price.
Since February 23, 1999, market makers have been able to post price
quotations for Eagletech's Common Stock on the Over the Counter Bulletin Board.
The historical prices for Eagletech's Common Stock on the OTC Bulletin Board are
as follows (calendar quarters):
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
First Quarter 1999 (Beginning 2/23/1999) $ 4.50 $2.25
Second Quarter 1999 $12.75 $1.50
Third Quarter 1999 $ 8.81 $5.50
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Fourth Quarter 1999 $ 8.00 $5.00
First Quarter 2000 $10.75 $4.8125
</TABLE>
The Securities and Exchange Commission adopted Rule 15g-9, which
established the definition of a "penny stock," for purposes relevant to
Eagletech, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stock in both public offering and in
secondary trading, and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
For the initial listing in the NASDAQ SmallCap Market(TM), a company
must have net tangible assets of $4 million or market capitalization of $50
million or a net income (in the latest fiscal year or two of the last fiscal
years) of $750,000, a public float of 1,000,000 shares with a market value of $5
million. The minimum bid price must be $4.00 and there must be three market
makers. In addition, there must be 300 stockholders holding 100 shares or more,
and the company must have an operating history of at least one year or a market
capitalization of $50 million. For continued listing in the NASDAQ SmallCap
Market(TM), a company must have net tangible assets of $2 million or market
capitalization of $35 million or a net income (in the latest fiscal year or two
of the last fiscal years) of $500,000, a public float of 500,000 shares with a
market value of $1 million. The minimum bid price must be $1.00 and there must
be two market makers. In addition, there must be 300 stockholders holding 100
shares or more. Eagletech can give no assurances that it will qualify its
securities for listing on NASDAQ or some other national exchange, or be able to
maintain the maintenance criteria necessary to insure continued listing. The
failure of Eagletech to qualify its securities or to meet the relevant
maintenance criteria after such qualification in the future may result in the
discontinuance
25
<PAGE> 26
of the inclusion of Eagletech's securities on a national exchange. In such
events, trading, if any, in Eagletech's securities may then continue in the
non-NASDAQ over-the-counter market. As a result, a stockholder may find it more
difficult to dispose of, or to obtain accurate quotations as to the market value
of, Eagletech's securities.
(b) Holders. There are approximately 200 holders of Eagletech's Common Stock.
All share numbers are adjusted for a 1 for 10 reverse stock split effective
April 1, 1999 and a 1 for 3 reverse stock split effective June 9, 1999.
During 1998, Goldplate Holdings Enterprises, Inc. ("Goldplate") (Eagletech's
former name before June, 1999) did not issue any Common Stock.
In 1999, Goldplate and Eagletech issued 9,209,059 shares to investors for cash,
in exchange for services or assets or to retire debt.
In January 2000, Eagletech issued a total of 204,999 shares as compensation to
consultants in private transactions.
All of the issued and outstanding shares of Eagletech's Common Stock were issued
in accordance with exemptions from registration afforded by Sections 3(b) or
4(2) of the Securities Act of 1933, as amended (the "Securities Act"). As of the
date of this registration statement, 3,853,342 shares of Eagletech's Common
Stock held by non-affiliates are eligible for sale, including 520,018 shares of
restricted stock eligible under Rule 144 promulgated under the Securities Act of
1933, as amended, subject to certain limitations included in such Rule. In
general, under Rule 144, a person (or persons whose shares are aggregated), who
has satisfied a one year holding period, under certain circumstances, may sell
within any three-month period a number of shares of restricted stock which does
not exceed the greater of one percent of the then outstanding Common Stock or
the average weekly trading volume during the four calendar weeks prior to such
sale. Rule 144 also permits, under certain circumstances, the sale of shares of
restricted without any quantity limitation by a person who has satisfied a
two-year holding period and who is not, and has not been for the preceding three
months, an affiliate of Eagletech.
Dividends. Eagletech has not paid any dividends to date, and has no plans to do
so in the immediate future.
Item 2. Legal Proceedings.
There is no litigation pending or threatened by or against Eagletech.
Item 3. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure. Eagletech has changed accountants since its formation; but
there were no disagreements with the findings of Eagletech's former accountants.
26
<PAGE> 27
Item 4. Recent Sales of Unregistered Securities.
(a) Securities sold. Eagletech sold and issued its securities during the three
year period preceding the date of this registration statement in a series of
private transactions or exempt offerings of securities; as follows:
All share numbers are adjusted for a 1 for 10 reverse stock split
effective April 1, 1999 and a 1 for 3 reverse stock split effective June 9,
1999.
In March, 1999, prior to the acquisition by Goldplate of Eagletech
Communications, Inc., a Florida corporation ("Eagletech-Florida"), Goldplate
issued 520,018 shares to the stockholders of 21ST Century Frontier Group, Inc.
("21st Century") in exchange for their shares of 21st Century in a transaction
designed to change the Goldplate's state of incorporation to Nevada from
Florida. The 21st Century shares were valued at an aggregate of $158.00
On April 1, 1999, Goldplate acquired Eagletech-Florida in exchange for
5,000,000 shares of common stock in a private transaction, of which 4,882,401
were issued to the principals of Eagletech-Florida in exchange for all the stock
of Eagletech-Florida and 117,599 were issued to debtholders of Eagletech-Florida
in exchange for $100,338 of debt.
On April 5, 1999, in order to raise additional capital, Eagletech sold
3,333,333 shares to investors in an offering exempt under Rule 504 of Regulation
D for $1,000,000 or $0.30 per share.
On May 5, 1999, Eagletech issued 675,002 shares of restricted stock to
officers and consultants of Eagletech as compensation in a private transaction
exempt under Section 4(2) valued at $4,005,012 (or $6.00 per share).
On May 25, 1999, an additional 150,000 restricted shares were issued as
compensation to consultants for services valued at $1,725,000 (or $11.50 per
share) exempt under Section 4(2).
On May 26, 1999, Eagletech approved a 1-for-3 reverse stock split,
effective June 9, 1999.
On June 1, 1999, Eagletech issued 6,888 shares to certain vendors in
settlement of certain debts of Goldplate in private transactions in exchange for
$20,000 of debt in a transaction exempt under Section 4(2).
Certain of the shares of Common Stock of Eagletech were sold and issued on
various dates, described above, for investment purposes in "private
transactions" and are "restricted" shares as defined in Rule 144 under the
Securities Act of 1933, as amended. These shares may not be offered for public
sale except under Rule 144, or otherwise,
27
<PAGE> 28
pursuant to said Act. In summary, Rule 144 applies to affiliates (that is,
control persons) and nonaffiliates when they resell restricted securities (those
purchased from the issuer or an affiliate of the issuer in nonpublic
transactions). Nonaffiliates reselling restricted securities, as well as
affiliates selling restricted or nonrestricted securities, are not considered to
be engaged in a distribution and, therefore, are not deemed to be underwriters
as defined in Section 2(11) of the Securities Act of 1933, as amended, if six
conditions are met:
(1) Current public information must be available about the issuer unless sales
are limited to those made by non-affiliates after two years.
(2) When restricted securities are sold, generally there must be a one-year
holding period.
(3) When either restricted or nonrestricted securities are sold by an affiliate
after one year, there are limitations on the amount of securities that may
be sold; when restricted securities are sold by non-affiliates between the
first and second years, there are identical limitations; after two years,
there are no volume limitations for resales by non-affiliates.
(4) Except for sales of restricted securities made by non-affiliates after two
years, all sales must be made in brokers' transactions as defined in
Section 4(4) of the Securities Act of 1933, as amended, or a transaction
directly with a "market maker" as that term is defined in Section 3(a)(38)
of the 1934 Act.
(5) Except for sales of restricted securities made by non-affiliates after two
years, a notice of proposed sale must be filed for all sales in excess of
500 shares or with an aggregate sales price in excess of $10,000.
(6) There must be a bona fide intention to sell within a reasonable time after
the filing of the notice referred to in (5) above.
(b) Underwriters and other purchasers. There were no underwriters in the sale
and issuance of any of Eagletech's securities. All of the purchasers of Common
Stock from Eagletech have had a pre-existing personal or business relationship
with Eagletech or its officers and directors.
Consideration.
Eagletech sold certain shares of stock for cash and others were issued either
for services rendered to Eagletech, for the assets of Eagletech-Florida or to
settle outstanding debts of Eagletech or its predecessor. Eagletech sold shares
in 1999 at various prices, ranging from $0.10 to $4.00. Other shares were issued
for services rendered or to settle debt of Eagletech and are valued at the value
of the services received or debt retired..
(d) Exemptions from Registration Relied Upon.
The sale and issuance of the shares of stock were exempt from registration under
the Securities Act of 1933, as amended, by virtue of either section 3(b) or 4(2)
and, in certain cases, Regulation D promulgated thereunder. Purchasers in
transactions exempt under Section 4(2) and Rule 506 purchased shares from
Eagletech for investment and not with a
28
<PAGE> 29
view to distribution to the public. Eagletech sold 3,333,334 shares under Rule
504 of Regulation D that are not subject to restrictions on resale.
Item 5. Indemnification of Directors and Officers.
Except for acts or omissions which involve intentional misconduct, fraud or
known violation of law or for the payment of dividends in violation of the
Nevada Revised Statutes, there shall be no personal liability of a director or
officer to Eagletech, or its stockholders for damages for breach of fiduciary
duty as a director or officer. Eagletech may indemnify any person for expenses
incurred, including attorneys fees, in connection with their good faith acts if
they reasonably believe such acts are in and not opposed to the best interests
of Eagletech and for acts for which the person had no reason to believe his or
her conduct was unlawful. Eagletech may indemnify the officers and directors for
expenses incurred in defending a civil or criminal action, suit or proceeding as
they are incurred in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount of such expenses if it is ultimately determined by a
court of competent jurisdiction in which the action or suit is brought
determined that such person is fairly and reasonably entitled to indemnification
for such expenses which the court deems proper. Insofar as indemnification for
liabilities arising under the 1933 Act may be permitted to officers, directors
or persons controlling Eagletech pursuant to the foregoing, Eagletech has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is therefore unenforceable.
PART F/S
Financial Statements. The following financial statements are attached to this
report and filed as a part thereof.
29
<PAGE> 30
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY
GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AND
REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
30
<PAGE> 31
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Certified Public Accountants 32
Balance Sheets 33
Statements of Operations 34
Statements of Stockholders' Equity (Deficit) 35
Statements of Cash Flows 36
Notes to the Financial Statements 37
</TABLE>
31
<PAGE> 32
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Eagletech Communications, Inc.,
formerly Goldplate Holdings Enterprises, Inc.
We have audited the accompanying balance sheet of Eagletech Communications,
Inc., formerly Goldplate Holdings Enterprises, Inc., (a development stage
company), as of March 31, 1999, and the related statements of operations and
stockholders' equity (deficit) and cash flows for the years ended March 31, 1999
and 1998, and for the period December 20, 1996 (inception) to March 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Eagletech Communications, Inc.,
formerly Goldplate Holdings Enterprises, Inc., (a development stage company) as
of March 31, 1999, and the results of its operations and its cash flows for the
years ended March 31, 1999 and 1998, and for the period December 20, 1996
(inception) to March 31, 1999, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has suffered losses from operations and has a
net capital deficiency that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
SWEENEY GATES & CO.
Fort Lauderdale, Florida
September 28, 1999
32
<PAGE> 33
EAGLETECH COMMUNICATIONS, INC.
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(a development stage company)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
December 31, March 31,
1999 1999
------------ ---------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 145,638 $ --
----------- ---------
Total current assets 145,638 --
----------- ---------
Property and equipment, net 182,812 --
Other assets 7,682 --
----------- ---------
$ 336,132 $ --
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses $ 199,936 $ 47,258
Related party notes 33,902 88,127
Judgments payable 24,638 68,196
Convertible debt -- 88,200
----------- ---------
Total current liabilities 258,476 291,781
----------- ---------
Stockholders' equity (deficit)
Common stock, $.0001 par value, 100,000,000 shares
authorized; 9,745,241 and 4,882,401 shares issued and
outstanding 975 488
Additional paid-in capital 9,387,416 (486)
Deficit accumulated during the development stage (9,310,735) (291,783)
----------- ---------
Stockholders' equity (deficit) 77,656 (291,781)
----------- ---------
$ 336,132 $ --
=========== =========
</TABLE>
33
<PAGE> 34
EAGLETECH COMMUNICATIONS, INC.
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(a development stage company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
December 20, 1996 December 20, 1996
(inception) to Year ended Year ended (inception) to
Nine months ended December 31, December 31, March 31, March 31, March 31,
1999 1998 1999 1999 1998 1999
-------------- ----------- ----------------- ----------- --------- -----------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Sales $ -- $ -- $ -- $ -- $ -- $ --
Operating expenses:
Public relations 575,000 -- 575,000 -- -- --
Investment banking fees 1,150,000 -- 1,150,000 -- -- --
Compensation 6,281,893 -- 6,281,893 -- -- --
Start up 204,000 -- 204,000 -- -- --
Consulting fees 248,531 -- 248,531 -- -- --
Research and development -- 5,374 65,868 7,165 58,703 65,868
Selling, general,
and administrative 594,608 7,717 770,061 10,218 67,225 175,453
----------- --------- ----------- --------- --------- ---------
Total operating expenses 9,054,032 13,091 9,295,353 17,383 125,928 241,321
----------- --------- ----------- --------- --------- ---------
Loss from operations (9,054,032) (13,091) (9,295,353) (17,383) (125,928) (241,321)
----------- --------- ----------- --------- --------- ---------
Other income (expense):
Interest expense (6,281) (12,852) (33,781) (17,136) (10,364) (27,500)
Interest income 8,885 8,885
Gain on settlement of judgments 32,476 32,476
Loss on disposal of property
and equipment -- (22,962) (22,962) (22,962) -- (22,962)
----------- --------- ----------- --------- --------- ---------
Total other income (expense) 35,080 (35,814) (15,382) (40,098) (10,364) (50,462)
----------- --------- ----------- --------- --------- ---------
Net loss $(9,018,952) $(48,905) $(9,310,735) $(57,481) $(136,292) $(291,783)
=========== ========= =========== ========= ========= =========
Loss per share, basic and diluted $ (1.41) $ (0.01) $ (0.01) $ (0.03)
=========== ========= ========= =========
Weighted avaverages shares outstanding 6,411,928 4,882,401 4,882,401 4,882,401
=========== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE> 35
EAGLETECH COMMUNICATIONS, INC.
FORMERLY GOLDLPLATE HOLDINGS ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES TO STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Deficit
accumulated
Additional during the
Common stock paid-in development
Shares Amount capital stage Total
------------ ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Issuance of stock,
December 20, 1996 4,882,401 $ 488 $ (486) $ $ 2
---------- ----------- ----------- ----------- ---------
Balance, December 31, 1996 4,882,401 488 (486) -- 2
Net loss for year ended
March 31, 1997 -- -- -- (98,010) (98,010)
---------- ----------- ----------- ----------- ---------
Balance, March 31, 1997 4,882,401 488 (486) (98,010) (98,008)
Net loss for year ended
March 31, 1998 (136,292) (136,292)
---------- ----------- ----------- ----------- ---------
Balance, March 31, 1998 4,882,401 488 (486) (234,302) (234,300)
Net loss for year ended
March 31, 1999 (57,481) (57,481)
---------- ----------- ----------- ----------- ---------
Balance, March 31, 1999 4,882,401 488 (486) (291,783) (291,781)
Recapitalization 520,018 52 106 158
Offering of stock to investors 3,333,333 333 1,260,667 1,261,000
Issuance of stock for compensation 735,002 74 6,281,819 6,281,893
Issuance of stock for services 150,000 15 1,724,985 1,725,000
Bonds converted to common stock 117,599 12 100,326 100,338
Issuance of stock for settlement
of GHE liabilities 6,888 1 19,999 20,000
Net loss for the nine months ended
December 31, 1999 (unaudited) (9,018,952) (9,018,952)
---------- ----------- ----------- ----------- ---------
Balance, December 31, 1999 (unaudited) 9,745,241 $ 975 $ 9,387,416 $(9,310,735) $ 77,656
========== =========== =========== =========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
<PAGE> 36
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(a development stage company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
December 20, 1996 December 20, 1996
(inception) to Year ended Year ended (inception) to
Nine months ended December 31, December 31, March 31, March 31, March 31,
1999 1998 1999 1999 1998 1999
-------------- ----------- ----------------- ----------- --------- -----------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(9,018,952) $(48,905) $(9,310,735) $(57,481) $(136,292) $(291,783)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation 11,780 -- 18,430 -- 4,434 6,650
Issuance of stock for
services and compensation 8,006,893 -- 8,006,893 -- -- --
Start up expense 204,000 -- 204,000 -- -- --
Loss on disposal of property and
equipment -- 22,962 22,962 22,962 -- 22,962
Gain on settlement of judgments (32,476) (32,476)
Changes in operating
assets and liabilities:
(Increase) decrease in deposits -- -- -- 2,030 (2,030) --
Increase (decrease) in accounts
payable and accrued expenses (13,608) 20,624 33,650 27,136 18,873 47,258
Increase in other assets (7,682) -- (7,682) -- --
Increase (decrease) in
judgments payable (16,500) -- 51,696 -- 68,196 68,196
----------- -------- ----------- -------- --------- ---------
Net cash used in
operating activities (866,545) (5,319) (1,013,262) (5,353) (46,819) (146,717)
----------- -------- ----------- -------- --------- ---------
Cash flows from investing activities:
Purchases of property and equipment (194,592) -- (224,205) -- -- (29,613)
----------- -------- ----------- -------- --------- ---------
Net cash used in
investing activities (194,592) -- (224,205) -- -- (29,613)
----------- -------- ----------- -------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
36
<PAGE> 37
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(a development stage company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
December 20, 1996 December 20, 1996
(inception) to Year ended Year ended (inception) to
Nine months ended December 31, December 31, March 31, March 31, March 31,
1999 1998 1999 1999 1998 1999
------------- ----------- ----------------- ----------- --------- -----------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
Proceeds from debt -- 5,336 176,330 5,336 45,866 176,330
Proceeds from sale of stock 1,261,000 -- 1,261,000 -- -- --
Payments on related party notes (54,225) -- (54,225) -- -- --
----------- ------ ----------- ------- -------- --------
Net cash provided by
financing activities 1,206,775 5,336 1,383,105 5,336 45,866 176,330
----------- ------ ----------- ------- -------- --------
Net increase (decrease) in cash and
cash equivalents: 145,638 17 145,638 (17) (953) --
----------- ------ ----------- ------- -------- --------
Cash and cash equivalents,
beginning or period -- 17 -- 17 970 --
----------- ------ ----------- ------- -------- --------
Cash and cash equivalents, end of period $ 145,638 -- $ 145,638 $ -- $ 17 $ --
=========== ====== =========== ======= ======== ========
Supplemental information:
Cash paid for interest
during the period $ -- $ -- -- $ -- -- $ --
=========== ====== =========== ======= ======== ========
Cash paid for income taxes
during the period $ -- $ -- -- $ -- -- $ --
=========== ====== =========== ======= ======== ========
Schedule of noncash investing and
financing activities:
Interest on convertible bonds
contribution to additional
paid-in capital $ 12,138 $ 12,138
=========== ========
Assumption of liabilities due to merger $ 204,000 $204,000
=========== ========
Issuance of common stock to settle
merger liabilities $ 20,000 $ 20,000
=========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
37
<PAGE> 38
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS AND BASIS OF PRESENTATION
Goldplate Holdings Enterprises, Inc. ("GHE"), subsequently Eagletech
Communications, Inc. ("the Company"), was incorporated in Nevada on August 8,
1997. GHE was a development stage company and inactive.
On April 1, 1999, GHE's stockholders approved a merger with Eagletech
Communications, Inc. ("Eagletech Florida"), a Florida corporation, incorporated
on December 20, 1996, and located in Fort Lauderdale, Florida. Eagletech Florida
was engaged in the development of a proprietary unified communications products
and services to complement existing telecommunications technologies for
voice-mail, messaging and connectivity solutions. The merger agreement provided
that the Eagletech Florida stockholders would receive 4,882,401 shares and
convertible bondholders were to receive 117,599 shares for a total of 5,000,000
shares of GHE common stock. At the date of the transaction, GHE had no assets or
operations and had liabilities of approximately $204,000, which were recorded as
accounts payable and expensed as startup costs. For accounting purposes, the
transaction was treated as a recapitalization. Therefore, the financial
statements of the Company reflect the assets, liabilities and operations of
Eagletech Florida as if it had been the reporting entity since inception. On
June 8, 1999, subsequent to the merger, GHE changed its name to Eagletech
Communications, Inc.
The Company was in the development stage and its efforts through December 31,
1999 were principally devoted to organizational activities, raising capital and
development of its products. Management anticipates incurring substantial
additional losses as it pursues its development efforts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNAUDITED INTERIM FINANCIAL STATEMENTS - The accompanying financial statements
of the Company for the nine months ended December 31, 1999 and 1998, and for the
period from December 20, 1996 (inception) to December 31, 1999, are unaudited,
but, in the opinion of management, reflect the adjustments, all of which are of
a normal recurring nature, necessary for a fair presentation of such financial
statements in accordance with generally accepted accounting principles. The
results of operations for an interim period are not necessarily indicative of
the results for a full year.
PROPERTY AND EQUIPMENT - Property, and equipment are stated at cost. Major
renewals and improvements are capitalized, while maintenance and repairs are
expensed when incurred. The cost and accumulated depreciation for property, and
equipment sold, retired, or otherwise disposed of are relieved from the
accounts, and resulting gains or losses are reflected in income. Depreciation is
computed over the estimated useful lives of depreciable assets using the
straight-line method.
38
<PAGE> 39
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAX - Income tax assets and liabilities are computed annually for
temporary differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future,
based upon enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. A valuation allowance is
recognized if, based on the weight of available evidence, it is more likely than
not that some portion or all of the deferred tax asset will not be realized.
Income tax expense is the tax payable or refundable for the period, plus or
minus the change during the period in deferred tax assets and liabilities.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The fair value of the Company's financial
instruments such as accounts payable and notes payable approximate their
carrying value.
ADVERTISING COSTS - Advertising costs were $633 in 1999 and $4,701 in 1998 and
are charged to operations as incurred.
DEVELOPMENT COSTS - All costs relating to start up and development of its
telecommunications systems are expensed as incurred.
IMPAIRMENT OF LONG-LIVED ASSETS - The Company evaluates the recoverability of
its property and equipment, and other assets in accordance with Statement of
Financial Accounting Standards Board ("FASB") No.121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Live Assets to Be Disposed Of"
("SFAS 121"). SFAS 121 requires recognition of impairment of long-lived assets
in the event the net book value of such assets exceeds the estimated future
undiscounted cash flows attributable to such assets or the business to which
such intangible assets relate. When an asset exceeds its expected operating cash
flow, it is considered to be impaired and is written down to fair value, which
is determined based on either discounted future cash flows or appraised values.
No impairments were recognized during the period ended December 31, 1999.
LOSS PER SHARE - The Company accounts for earnings per share according to
Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128"). FAS
128 requires presentation of basic and diluted earnings or loss per share.
Shares related to the convertible bonds were excluded from the computation of
net loss per share because the effect of inclusion would be anti-dilutive due to
the Company's net loss. Earnings or loss per share is computed by dividing net
income or loss by the weighted average number of shares outstanding during the
period.
39
<PAGE> 40
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the accompanying
financial statements, the Company incurred net losses of $57,481 and $136,292
for the years ended March 31, 1999 and 1998, respectively, and as of March 31,
1999, the Company's current liabilities exceeded its current assets by $291,781.
During the nine months ended December 31, 1999, the Company incurred additional
net losses of $9,024,701. The Company's continued existence is dependent upon
its ability to resolve its liquidity problems, principally by obtaining capital,
commencing sales of its products and generating sufficient revenues to become
profitable. The ability of the Company to continue as a going concern is
dependent upon obtaining additional capital subsequent to the merger with GHE
(see Note 9).
Management intends to raise working capital by additional equity transactions
through private placements. Subsequent to March 31, 1999, the Company has raised
additional capital. See Footnote 13. Management also plans to complete
development of its services and commence operations of its services by May 2000,
which should generate cash flow. The uncertainty of the ability of the Company
to continue operations in the future will be mitigated if the Company is
successful in raising sufficient capital and commencing operations. The Company
has a limited operating history and its prospects are subject to the risks,
expenses and uncertainties frequently encountered by companies in the rapidly
evolving telecommunications markets. These risks include the failure to develop
the Company's services, the rejection of the Company's services by consumers and
the inability of the Company to increase revenues to generate positive cash
flow.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
4. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
Estimated
December 31, 1999 Useful lives
----------------- ------------
(unaudited)
<S> <C> <C>
Equipment $192,731 5 years
Furniture and fixtures 1,861 7 years
--------
194,592
Less: accumulated depreciation (11,780)
--------
$182,812
========
</TABLE>
40
<PAGE> 41
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. RELATED PARTY NOTES
Related party notes are unsecured demand notes due to stockholders, including
accrued interest at 7%.
6. CONVERTIBLE DEBT
In 1998, the Company issued unsecured convertible notes in the amount of
$88,200, due on demand, with interest accruing at seven percent. Subsequent to
March 31, 1999, the notes were converted at $.75 per share to 117,599 shares of
common stock. At this time, the accrued interest of $12,138 was contributed to
capital.
7. JUDGMENTS PAYABLE
As Of March 31, 1999, the Company had judgments relating to three outstanding
irrevocable financing agreements from various banks in the amount of $68,196,
issued in connection with the lease of certain equipment. During the year ended
March 31, 1999, the equipment was abandoned. However, the judgments continue to
accrue interest at the rate of 10%, which is included in accounts payable and
accrued expenses. Subsequent to March 31, 1999, the Company settled a portion of
the judgments totaling $49,000, including interest, which resulted in a gain of
$32,476.
8. OPERATING LEASES
The Company leases its office space on a month-to-month basis. Subsequent to
year-end, the Company leased additional facilities containing approximately
1,000 square feet, for ten years, expiring on September 30, 2009. Rental expense
was $15,433 for the nine months ended December 31, 1999.
9. MERGER AND STARTUP COSTS
Prior to merging with Eagletech Florida, on March 17, 1999, the Company
completed an exchange of stock whereby 21st Century Frontier Group, Inc. ("21st
Century"), a publicly trading Company, became a wholly owned subsidiary. The
Company became the surviving entity. This share agreement resulted in the
Company assuming $204,000 in liabilities. Since there were no assets or
operations in 21st Century, the $204,000 was written off as startup costs on
April 1, 1999, the date of the GHE and Eagletech Florida merger. The Company may
have additional contingent liabilities in connection with this transaction. No
accruals have been made for any contingencies.
41
<PAGE> 42
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. MERGER AND STARTUP COSTS (CONTINUED)
The financial statements are not consolidated as 21st Century had no operations
and was dissolved subsequent to March 31, 1999.
10. SALE OF SECURITIES AND MERGER
In May 1999, the Company approved a one for three reverse stock split effective
June 9, 1999. All share and per share information has been restated to
retroactively reflect this split. In March 1999, GHE issued 520,018 shares to
individuals pursuant to a private placement. No cash was raised in the offering.
These stockholders were unrelated to Eagletech Florida.
On April 1, 1999, the Company (Goldplate), pursuant to a private placement
offering, sold 3,333,333 shares of common stock for $1,261,000 in cash.
In June 1999, the Company issued a total of 675,002 shares of stock to officers
and a founding stockholder and recorded a $5,818,768 charge for compensation.
During August and September of 1999, 60,000 shares of common stock were issued
for services performed, totaling $463,125. Additionally, 150,000 shares of
common stock were issued to the Company's investment banking and public
relations firms for services performed, totaling $1,725,000. These stock
transactions were expensed at fair market value on the date the transactions
were approved by the board of directors. In June 1999, the convertible
bondholders converted their bonds to 117,599 shares of common stock (see Note
6). In September 1999, 6,888 shares of common stock were issued as payment for
$25,000 of accounts payable, which were assumed in the GHE and Eagletech Florida
merger.
In January and February 2000, the Company raised approximately $490,000 in a
private placement.
11. INCOME TAXES
The Company did not have any net operating loss carryforwards as of March 31,
1999, due to the change of business and ownership provisions of the Internal
Revenue Code.
The Company had available at December 31, 1999, operating loss carryforwards for
federal and state tax purposes generated since its merger with Eagletech Florida
approximately $9,075,000, which could be applied against taxable income in
subsequent years through 2020. The tax effect of the net operating loss is
approximately $3,385,000, and a full valuation allowance has been recorded,
since realization is uncertain.
42
<PAGE> 43
EAGLETECH COMMUNICATIONS, INC.,
FORMERLY GOLDPLATE HOLDINGS ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12. COMMITMENTS
EMPLOYMENT AGREEMENTS - On September 30, 1999, the Company entered into an
employment agreement with the Chief Operating Officer for three years commencing
October 1, 1999. The agreement included a signing bonus of $10,000 and an
initial annual compensation of $110,000.
Also, the Company shall pay incentive compensation equal to three percent of
Company pre-tax earnings in excess of $750,000. Previously, the employee was
given, at no cost, 100,000 shares of restricted common stock. The fair market
value of the common stock was expensed as compensation. See footnote 10.
On September 30, 1999, the Company entered into an employment agreement with the
Director of Marketing for three years commencing October 1, 1999. The agreement
included a signing bonus of $7,500 and an initial annual compensation of
$100,000. Also, the Company shall pay incentive compensation equal to two
percent of Company pre-tax earnings in excess of $750,000. Previously, the
employee was given, at no cost, 50,000 shares of restricted common stock. The
fair market value of the common stock was expensed as compensation. See footnote
10.
On September 30, 1999, the Company entered into an employment agreement with the
Director of Technology for three years commencing October 1, 1999. The agreement
included a signing bonus of $7,500 and an initial annual compensation of
$90,000. Also, the Company shall pay incentive compensation equal to one percent
of Company pre-tax earnings in excess of $750,000.
43
<PAGE> 44
EXHIBITS
<PAGE> 45
Item 1. Exhibit Index
Exhibit
No
- --
(3) Articles of Incorporation and Bylaws
3.1 Articles of Incorporation +
3.2 Bylaws +
(10) Material Contracts
10.1 Consulting Agreement with LBC Capital, Inc. +
10.2 Services Agreement with BellSouth Telecommunications, Inc. +
10.3 Employment Agreement with Robert J. Dobbs +
10.4 Employment Agreement with Rodney Young +
10.5 Employment Agreement with Robert Bergman +
(21) Subsidiaries of the Registrant
21.1 Subsidiaries of the Registrant +
(27) Financial Data Schedule
27.1 Financial Data Schedule++
- ---------------
+ Filed with the Company's initial filing on Form 10-SB filed February 1, 2000.
++Filed herewith
<PAGE> 46
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 12, 2000 EAGLETECH COMMUNICATIONS, INC.
By: /s/ ROBERT J. DOBBS, JR.
--------------------------------
Robert J. Dobbs, Jr., President
<PAGE> 1
EXHIBIT 23.1
Consent of Sweeney, Gates & Co.
{Letterhead of Sweeney, Gates & Co.]
To Whom It May Concern: December 6, 1999
The firm of Sweeney, Gates & Co., Certified Public Accountants, consents to the
inclusion of their report of September 28, 1999, on the Financial Statements of
Eagletech Communications, Inc., as of March 31, 1999, 1999, in any filings that
are necessary now or in the near future with the U.S. Securities and Exchange
Commission.
Very truly yours,
SWEENEY, GATES & CO.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED DECEMBER 31, 1999
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> MAR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 145,638
<PP&E> 182,812
<DEPRECIATION> 0
<TOTAL-ASSETS> 336,132
<CURRENT-LIABILITIES> 258,476
<BONDS> 0
0
0
<COMMON> 9,745,241
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 336,132
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 9,054,032
<OTHER-EXPENSES> (35,080)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,281
<INCOME-PRETAX> (9,018,952)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,018,952)
<EPS-BASIC> (1.41)
<EPS-DILUTED> (1.41)
</TABLE>
